DOW JONES NEWSWIRES
ArvinMeritor Inc. (ARM) said its cost cutting effort will save
more than previously planned as the company struggles to conserve
cash to meet its debt covenants.
The auto-parts industry has been seen a sharp downturn in demand
and have been cutting production, jobs, dividends and pay to stay
afloat.
In February and March, ArvinMeritor said it implemented an
additional 250 job cuts, bringing the total to roughly 1,800 since
October. It expects these and other moves will save $95 million a
year, in addition to $335 million is savings outlined in
February.
Then, as ArvinMeritor unveiled a fiscal first-quarter loss, the
company said working capital was expected to be a drain on
liquidity in the current quarter after what it described as "very
late changes to production schedules" by customers left it with
higher inventory. Auto makers have been slashing production in
light of decades-low sales.
Since October, ArvinMeritor's cost-cutting moves have also
included closing two Canadian plants, cutting salaries, suspending
its 401(K) matching contributions in the U.S., extending plant
shutdowns and slashing its dividend.
Amid the woes, the company earlier this year abandoned plans to
spin off its auto parts unit as a separate business unit.
ArvinMeritor also has a commercial-vehicle business.
The company's shares closed Thursday at $1.20 and didn't trade
premarket. The stock is down 58% this year.
-By Tess Stynes, Dow Jones Newswires; 201-938-2473;
tess.stynes@dowjones.com